New IMF report lowers Ghana’s 2016 growth rate

A new report by the International Monetary Fund (IMF) is projecting that the economy will not witness much growth as forecasted by government for this year.

The World Economic Outlook report released by the IMF in Washington DC indicates that Ghana will record a growth rate of 4.5 percent, lower than the 5.4 percent that the Finance Minister, Seth Terkper, has projected for 2016.

The IMF report also gives a preview of how over 100 member countries of the Fund will perform in terms of inflation, economic growth for a particular year, current account balance and financial account balances.

According to persons close to the IMF, the 4.2 percent growth rate projection is informed by how declining commodity prices will impact negatively on government’s own projected revenue for this year, a development that is sure to stifle growth.

Ghana’s economic situation has also been compounded by the current energy crisis which appears not to be ending anytime soon. The energy challenge will surely to affect the economic activities that government is hoping will take place in the country.

For some economists, the lowering of Ghana’s growth projection by the IMF is an indication that the current challenges facing the economy is not over.

However for some , a 4.5 percent growth rate for a developing economy like Ghana might not be that bad looking at the fact that the country grew by about 3.5 percent last year.

The projections by IMF is critical because it would serve as a guide for some investors who are still contemplating on whether the environment is right to move their funds to Ghana.

The IMF report is also forecasting that inflation will increase to 12. 4 percent, as against Ghana government’s target of 10 percent.

The Fund also warned Ghana the debilitating effect of the recent crises that hit global crude oil prices might not be over.

The IMF is warning oil exporting countries like Ghana not to see the recent pickup in crude prices as an indication that recent crises that hit the commodity is over.

Crude prices on the international market – over the past one year – dropped by more than 70 percent and its currently trading at around 44 dollars a barrel.

The development caused Ghana’s revenue from crude export to reduce by more than 60 percent to 374million dollars.

This has resulted in the Finance Minister, Seth Terpker, announcing that he will review estimates in the 2016 budget by July.

But speaking at a press conference in Washington DC, Economic Counsellor of the IMF, Maurice Obstfeld, said it might be prudent for crude exporting countries like Ghana to carefully watch these developments.